MOFA ECONOMIC CHIEF ON EAS-APEC DIFFERENCES, FTA

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 001634

SIPDIS

SIPDIS

DEPT PASS USTR FOR CUTLER, NEUFFER, BEEMAN

C O R R E C T E D C O P Y////ADDED SIPDIS AS CAPTION//////

E.O. 12958: DECL: 03/28/2016
TAGS: ECON ETRD PREL PGOV APECO ASEAN JA
SUBJECT: MOFA ECONOMIC CHIEF ON EAS-APEC DIFFERENCES, FTA
STRATEGY, AND ECONOMIC PARTNERSHIP WITH U.S.

REF: TOKYO 1483

TOKYO 00001634 001.2 OF 002


Classified By: Ambassador J. Thomas Schieffer. Reason: 1.4 (b,d)


1. (C) Summary: The Foreign Ministry's (MOFA) obsession
with China is driving Japan's interest in the East Asian
Summit (EAS),the Director General of MOFA's Economic
Affairs Bureau told the U.S Senior Official for APEC on
March 23. The MOFA official has endeavored to brief the
Foreign Minister on the continued importance of APEC in
order to keep the EAS from dominating Japan's thinking on
regional integration. He also outlined Japan's new
strategy on free trade agreement (FTA) negotiations and how
he had helped to promote the Foreign Ministry as the lead
agency for Japan's economic diplomacy. He indicated Japan
would look into providing some funding to support a U.S.-
proposed project designed at enhancing APEC-ASEAN
cooperation and discussed ideas for a new economic
partnership arrangement with the United States. End
summary.

--------------
APEC and EAS
--------------


2. (C) In a March 23 meeting with MOFA Economic Affairs
Bureau Director General Kaoru Ishikawa, U.S. Senior
Official for APEC Ambassador Michael Michalak noted that,
during a recent trip to Washington, MOFA Vice Minister
Shiozaki had urged the United States to participate in the
East Asian Summit and had ignored APEC in his remarks. The
MOFA Asia Bureau is the main supporter of the EAS, Ishikawa
replied. He linked this position with the Asia Bureau's
obsession with China. Ishikawa said that he had been
briefing FM Aso on the importance of APEC, stressing both
that it is a rules-making international organization at
time when those types of bodies are in the ascendancy and
that it includes Taiwan. (Minami passed Amb. Michalak a
series of charts on the economic importance of the various
Asian organizations including ASEAN plus 3, the EAS, and
APEC, with APEC obviously by far the most important body.)
Ishikawa added that while it was hard to pressure China
bilaterally on issues without inciting strong resistance
from the Chinese, multilateral fora could be used
effectively to urge China's compliance with international
rules and norms.

--------------
EPAs/FTAs
--------------


3. (C) Ishikawa acknowledged that he had been called in
by LDP Policy Research Committee Chairman Hidenao Nakagawa
to explain why Japan's free trade agreements and economic
partnership agreements were proceeding so slowly. In
response, Ishikawa had devised the new streamlined strategy
for FTA negotiations that FM Aso outlined in his March 8
speech. (See reftel.) He also indicated that the language
Aso had used highlighting the leading role of the Foreign
Ministry in economic diplomacy had been something of a
coup. "Don't say that around METI officials!" Ishikawa
cautioned about the coup remark. He traced this position
to his successful addition of a strong defense of the
Foreign Ministry's role in economic diplomacy into the
Prime Minister's response to a question posed in a Diet
Budget Committee session. The Prime Minister's response
had been formally cleared interagency, Ishikawa said, but
stressed nevertheless that he (Ishikawa) was in danger of
being "attacked" as a result of this "victory." (Comment:
We had heard that, unlike the Prime Minister's remark, the
Foreign Ministry's speech was not cleared interagency. End
comment.)


4. (C) Ishikawa also drew attention to the parts of Aso's
speech on a possible FTA with the United States. He
stressed that the current ambivalent language was a more
positive to an FTA than the flat "no" that had been Japan's
position earlier.


5. (C) Ishikawa also stated that he had met with the
Australian Ambassador and had suggested the possibility of
a more limited trade agreement than the full "economic
partnership agreement" that had been envisioned. He noted
that it would not be possible for Japan to negotiate a FTA
that would meet WTO standards, but that a more limited
arrangement might be possible. Once an agreement had been
struck with Australia, such an model might be used with the
United States. He added that he had received some support

TOKYO 00001634 002 OF 002


from (unnamed) senior bureaucrats in the Ministry of
Agriculture, Forestry and Fisheries (MAFF).

--------------
Cooperation with ASEAN
--------------


6. (C) Amb. Michalak outlined his ideas for greater APEC-
ASEAN cooperation and described the pilot project on avian
influenza (AI) that the United States envisioned. Michalak
also asked whether Japan could provide funding to assist
the ASEAN members who could not receive aid from the United
States: Cambodia and Burma. Ishikawa asked APEC Office
Director Minami to look into whether some of the USD 1.5
billion that Japan had pledged in development assistance to
fight AI could be used for that purpose. Michalak then
indicated that Japan should consider the possibility of
including support for ASEAN in the framework of the U.S.-
Japan Strategic Development Alliance.

--------------
New U.S.-Japan Economic Partnership
--------------


7. (C) Ishikawa raised the topic of a new economic
partnership with the United States and called for an
approach very close to the U.S. "building block" concept.
Amb. Michalak suggested to Ishikawa a number of areas that
might be included in a new U.S.-Japan economic partnership.
These included IPR protection (particularly regarding
China),secure trade/supply chain security, and energy
issues. Action in these areas would still require some
sort of regulatory reform dialogue and bilateral investment
talks, but they would be capped by a new, streamlined sub-
cabinet meeting, which would focus on more strategic
questions. Ishikawa indicated that he agreed with this
proposed framework. (Note: Director General Ishikawa's
comments on Japan's suspension of U.S. beef imports are
reported septel.)


8. (U) Ambassador Michalak has cleared this message.
SCHIEFFER